Vauxhall’s future has once again been thrown up in the air after it emerged that General Motors is considering scrapping plans to sell its European operation to Magna, the Canadian car parts giant, and Russia’s Sberbank.
More than 5,500 workers at Ellesmere Port, Cheshire, and Luton will now have to wait until November 3 before they discover whether their company has been sold and they still have a job.
Until Friday, unions representing Vauxhall workers had been confident that they had achieved an agreement with Magna to keep open the factories with minimal redundancies.
But an investigation by the European competition authorities has transformed the situation and has given GM the opportunity to cancel the proposed sale and instead reorganise its European subsidiary itself.
During the course of the investigation EC competition authorities asked the German government if it had attached any strings to its £4bn loan to save Opel/Vauxhall. Berlin said in writing that the loan was available to any company with a credible plan to save the loss-making car company.
In reality, authorities in Berlin made it clear that the loan was available only to Magna because the Canadian company had agreed to minimise job losses in Germany.
But to admit to such a deal would be against EC competition rules and would have effectively killed the Magna sale.
GM, which was brow-beaten into selling to Magna, now unexpectedly has the chance of taking the loan money on offer, with no strings, and reorganising its former European operation itself.
This follows a letter from the EC to GM, asking it to confirm that it would make the same decision to sell to Magna knowing the loan was not tied to a decision in favour of Magna.
Asked whether it was a possibility that GM would opt out of the Magna deal, a source close to the GM board said: ‘I would never say never.’
Many board members of the American car maker, which emerged from Chapter 11 bankruptcy in July, have felt uneasy at selling their advanced car manufacturing technology to a company so closely tied to Russia.
If GM does decide to do the deal itself, it would spell bad news for many of the German Opel workers who make up half the 55,000 strong workforce.
At least one major German plant could be expected to be closed, as well as a Belgian factory. In contrast, the UK’s highly efficient factories could emerge in even better shape if GM were allowed to takeover again.
Source: This Is Money